EVEN THE “GOAT” WARREN BUFFETT SELLS!
Today’s blog is a DO-OVER! I was asked at a Zoom meeting, “When do you sell your stocks?” Have you ever heard a politician trying to answer a question where they are CLUELESS {which is a majority of the time, so they have practice}? I fumbled, mumbled, rambled, and gave DUMB answers. My wife said she did not notice I was faking it. Is that a compliment or insult? Maybe I have a future in politics!
MBA REFRESHER – AN EQUITY CAN DO THREE THINGS:
- Nothing – No Movement
- Move Up – Making You a Profit – When you sell
- Drop like a rock – HURTS!
WHY I SELL
It is a big decision to buy or sell equity, and I have sold probably 75% of the Mutual Funds, ETFs, Bonds, and Stocks I have owned. Below are my reasons for selling:
- I WAS WRONG [I know tough to imagine]! In some cases, I sold because I was losing MY BLASTED HARD-EARNED MONEY! Free Advice: Watching a stock price going down and HOPING/PRAYING for a reversal is a STUPID strategy! {Speaking from experience!} Unfortunately, when you are wrong about a company, it may keep plunging, DOWN, DOWN!. Does admitting I was wrong eliminate my political ambitions?
- Let’s look at General Electric – GE. GE stock reached a high of ~$263.00, July 2016. Then it dropped like an opponent fighting IRON Mike Tyson, in his prime and continued falling until November 2020, recording a painful ~81% LOSS. Another Piece of Free Advice: Pick a maximum loss and follow your rule. When I see a stock or ETF has lost 10 percent or more, I typically sell. I experienced these losses in almost every case because I did NOT do my homework evaluating a company’s fundamentals.
- COMPANY’S FUNDAMENTALS CHANGE: I owned an airline stock, Boeing, when two of their aircraft crashed, killing over 250 people. The company S-L-O-W-L-Y {like a drugged slough} admitted there was a design flaw; as you can imagine, the stock plunged. I sold at a loss.
- I NEED THE MONEY FOR ANOTHER INVESTMENT: In 2019 and 2020, I added to my real estate investments. I needed cash, and I sold some long-term equities/stocks/ETFs. I sold winners and losers. By selling equities for a loss, I can write those off my taxes. The good news, I did not have many equities with losses and sold winners primarily. {My CPA was not happy. Nor was I when I wrote that YUGEEE check to the IRS!} I am exploring other actions I could have taken to pay fewer taxes—a future blog topic.
- GOING WITH YOUR GUT OR, EVEN WORSE, UNCLE BUBBA’S RECOMMENDATIONS!
- Is it a good idea to research the stock of a company you routinely buy from? Absolutely! Peter Lynch advised examine and analyze what you are familiar with. But blindly investing in your favorite restaurant chain may not be an excellent investment.
- Uncle Bubba fries some delicious crispy catfish. When he offers stock advice, your best response should be, “I’m sorry, I have somewhere else I need to be.” {Jake, did I get it right?}
MY PREFERED OWNERSHIP PERIOD – THE REST OF MY LIFE!
LONG TERM INVESTING
Investors focused on long-term goals like gathering funds for retirement, children’s education, etc., tend to be more successful in achieving their target returns than those chasing short-term returns. Successful investors have learned sustainable money is typically not made in minutes or a few days. There is a difference between trading and investing.
CONCLUSION
I learned from Warren Buffett, who, in my less than humble opinion, is THE GREATEST OF ALL TIMES {GOAT) INVESTOR – When you find a good, even better great company, DO NOT SELL! Mr. Buffett has owned some of the holdings several decades
Before you invest in any stock, do YOUR research to have numbers and facts to back up your investing decisions. Look at factors like the company’s sales records, whether it has consistently invested in R&D to beat the competition and evaluate the management team’s competency. If the company itself is thriving but part of a dying industry, I usually take a pass.
Investing in the stock market is a great way to build wealth. With financial literacy and the right strategy, you can achieve your financial freedom.
The market does NOT care about your sex, race, or other immaterial factors.
NOW LET’S MAKE SOME MONEY!
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I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an NC. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
ABOUT ME
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate, and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation.As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.